Manufacturing — Question

To ask Her Majesty's Government what assessment they have made of the United Kingdom's international competitiveness in manufacturing, in the light of the recent investment by Nissan in north-east England.

My Lords, the United Kingdom has an internationally competitive manufacturing sector, with companies across a wide range of activities. The automotive sector is a great example of that. We were delighted to see the unveiling of Nissan's new concept car in Geneva this week. We welcome the news that the production model will be built at the Sunderland plant next year, creating about 2,000 new jobs at Nissan and in its supply chain.

I am grateful to my noble friend for that Answer. It is indeed very good news. Does he recall that three years ago the confidence of the north-east was shattered by three simultaneous announcements: the lay-off and mass redundancies at Nissan, the closure of the Corus steel plant and the shelving of plans for a £5 billion investment in new high-speed trains? Does he recognise that over the past year we have seen the reopening of the Corus steel plant, the go-ahead for the Hitachi investment in new trains, and now the thousands of new jobs coming through Nissan's investment? Does he agree that this demonstrates restored confidence in manufacturing in Britain and also in the policies pursued by the Government?

Before I answer that question, I am sure that the whole House would like to join me in congratulating my noble friend on just completing a 3,000-mile walk around Europe in support of the Olympic Truce initiative.

Yes, I agree with my noble friend that this is a sign of confidence in the British economy and in the north-east in particular. There is recent evidence of inward investment into this country in a range of sectors-not just cars but also rail, as my noble friend mentioned, renewable energy and steel. The investment comes from a range of countries-Japan, India, Thailand, China, as well as the more traditional sources of Europe and the United States. This is a welcome sign of the rejuvenation of the British economy.

We in the north-east are very pleased that Nissan, in my home town of Sunderland, is investing even more. It is a real tribute to the quality of the workforce and to the support that Nissan has had-it is proud to acknowledge it-from One North East, which has been so important in getting this investment. One North East is not there any more. What is also not there is a lot of jobs. Sunderland now has an unemployment rate of around 11 per cent and many young people feel that their opportunities have gone for another generation. What will the Government do to make sure that those lives are not written off?

The noble Baroness points to the significant challenges that we still face in many parts of the country. The north-east is a graphic example of an area that has become overly dependent on the public sector, where youth unemployment is at unacceptable levels and the role that foreign direct investment can play is significant in rejuvenating the economy and creating new job opportunities. Of course that is not the only thing that we need to see but it is a key part of it.

My Lords, as a proud manufacturer in one of the world's brewing capitals, Burton-on-Trent, I wonder whether the Government agree with the Leader of the Opposition that British manufacturers should proudly mark their products "Made in Britain" rather than "Made in the EU", as many of us do at present? Furthermore, what are the Government doing to help improve productivity in UK manufacturing and to learn from the United States, which has bounced back from recession? One of the key drivers there is the United States' impressive track record of ramping up its productivity.

The noble Lord makes two very important points, one of which is about "brand Britain", if I may use that phrase. I have travelled to over 30 countries in the past 12 months and, wherever I go, I find that brand Britain is extraordinarily well appreciated. In the next breath, people will often say, "Where are the British businesses? We would like to see more of them". I absolutely agree that we should be proud of the "Made in Britain" brand.

We have a continuing task of upgrading productivity. This is about a number of things, including the new Catapult centres and apprenticeship schemes. We need to continue to invest because we are behind the curve in productivity in a number of sectors.

My Lords, in this burst of Sunderland euphoria it would perhaps be unkind to ask the Minister whether he agrees with the recently leaked letter from Vince Cable to the Prime Minister on the subject of growth. However, perhaps I may ask whether the Minister believes that the Government are seriously considering the possibility of breaking up the Royal Bank of Scotland, which would, of course, lead to increased lending to the manufacturing industrial sector?

On my noble friend's first question, I believe that my right honourable friend the Secretary of State made an important point about a strategy that looks at the various sectors of this economy and identifies the appropriate measures that government can take to support them. It is of course true that while deficit reduction and fiscal consolidation is the most urgent challenge, we need to find a path of growth for this country that is more balanced and stable. On the question of the Royal Bank of Scotland, the answer is clear: we do not believe that breaking up the RBS is the right answer to addressing the financial issues in this country.

My Lords, before the Minister sits down, could he tell us what specific strategy his department has to deal in this area of manufacturing with the Chinese, if we are ever to hope to be able to compete?

The noble Lord raises a very important question. The Chinese are becoming more and more formidable competitors across a range of sectors, and we have to assume that that will continue. For the next generation, they will continue their fast growth and become more and more international. There are two answers to that question. One is to make sure that we are as innovative as we can be-that we move up the value chain, in short. Secondly, we need to be open to Chinese investment in this country. A key priority of my own brief is to encourage and nurture Chinese investment in this country, because they bring capital and, in some cases, expertise, which is valuable to this economy.